Banks Face Margin Pressure in Q1FY26

MARGIN PRESSURES WERE evident in the results of a clutch of banks that announced their Q1FY26 results.

- MAHESH NAYAK

This was in line with analysts' expectations. The sequential fall in the net interest margin (NIM) varied between 1 basis point and 67 basis points across 12 lenders.

On an average, the NIM declined 23 bps. The June quarter saw treasury gains helping cushion banks' profitability.

HDFC Bank's NIM contracted to 3.35% from 3.46% in Q4FY25, reflecting the faster repricing of deposits compared to assets following the policy rate cuts. Axis Bank delivered a negative surprise due to a one-time provisioning hit, which weighed on its performance. The NIM on a QoQ basis fell by 17 bps to 3.80%.